BOTHELL, Wash. — From his small Kenmore office, modest Bothell home and sometimes by using public Wi-Fi from the library, the FBI believes financial adviser Edward Kahler committed a nationwide fraud affecting accounts totaling $190 million, breaching the security of one of the biggest companies in the world.

Granted, Kahler had insider information gained from 25 years with AIG subsidiary Variable Annuity Life Insurance Co. Investigators suspect he took a million-name client list prior to being fired from VALIC in 2007 for trying to sell other investment products to VALIC customers.

But only recently is he believed to have hacked 761 retirement accounts with a stunningly simple but effective technique that hinged on our ever-growing expectation of convenience.

While the federal investigation looms, Kahler has very concrete problems at home.

Last November, Kahler was notified by the state Insurance Commission that his license was being revoked. (Interestingly, at last check, the sign above his Kenmore business, Key Resources, still reads, “Insurance and Retirement.”)

A state investigation found Kahler committed an obvious betrayal of one of his clients.

Patricia T., of Bothell, declined to speak about the incident, but investigative records are clear.

Patricia was Kahler’s client since at least 2008.

Last year, she went to consolidate her assets for retirement. A representative from Jackson National Insurance informed her that her money was tied up until 2022, when the most recent contract expired.

Patricia maintained she never signed a new contract with JNL. A closer look at the paperwork showed strange lines surrounding the signatures on the contract — lines consistent with copying and pasting efforts.

According to records, JNL fired Kahler, voided the new contract and Patricia once again had free rein over hard-earned retirement savings. (A corporate communications employee from JNL cited confidentiality concerns for not commenting on the case.)

The incident was reported to the state Insurance Commission and an investigation backed Patricia and JNL. Patricia had fully exposed Kahler for the first time in his career.

There had been close calls in the past.

“He’s arrogant, one word arrogant,” said Arnold Couch.

Sitting at his Lakewood home on a recent afternoon, Couch recalled how his relationship with Kahler soured.

Kahler had been his financial adviser, overseeing his account with VALIC for years.

In 2009, Couch said he got an unexpected call from Kahler, a bit of a surprise even though he’d been receiving a steady stream of mailings from Kahler that included birthday cards, letters and VALIC forms.

“He called me up one day and said he had something really good for me that I should be looking at,” Couch said.

Couch said the VALIC forms Kahler sent confused him.

“It’s like he’s representing the same company but he’s not,” said Couch. What’s more, Couch insists Kahler never disclosed VALIC had cut ties with him.

Couch said Kahler told him about how he could get a steady stream of money during retirement.

Looking back, Couch believes Kahler used the relationship they had built over years to manipulate him into putting about $100,000 in a new annuity.

“I just took a look at that and just trusted him, he never explained to me that you locked up your money for 10 years, he didn’t explain to me if you tried to take your money out early there’s a big penalty,” Couch said. “I’m over 70, (people my age) are not always swift on what’s going on in the financial world.”

The same day he signed the contract, Couch realized he had no idea what he had just agreed to. A little research revealed the drawbacks of an annuity.

“I trusted him that he would do the right thing for me and my situation. Why am I signing up, when I’m almost 70, for 10 years?” Couch asked. “He didn’t care about that, he just wanted his commission.”

The next day he called Kahler to undo the transaction. An angry Kahler agreed to tear up the contract.

The ordeal made him think about what Kahler was really doing. Why did he send VALIC forms but try to push him into a new annuity?

Couch called VALIC and learned Kahler was no longer with the company. He filed a complaint that became a part of a state investigation into Kahler.

“This is not right. He’s taking privileged information that he should not have and he’s acting upon it to make a profit, and that’s criminal,” Couch said.

In state files, VALIC makes it clear it has received numerous complaints about Kahler since firing him.

Customers reported to the company Kahler “possesses their nonpublic personal information … creates confusion about his current affiliation with VALIC” and “his numerous contacts with them are harassment.”

Until last year, Kahler was always able to explain away complaints against him to state investigators.

But just as his heavy-handed forgery was uncovered, the FBI was starting its own investigation into his business — which, in a federal search warrant application, agents wrote is “permeated in fraud.”

The feds believe that around Christmas last year, Kahler began hacking VALIC client accounts. According to search warrant documents, the million-name client list he’s believed to have taken before being fired was filled with people’s account numbers, social security numbers, birth dates and more.

With that information, it’s alleged he began creating partial and complete online profiles for at least 761 people from Washington and nationwide.

Like many online account systems, VALIC allows customers to create web accounts straight from its site. It only takes minutes to accomplish, a streamlined process consumers all but demand.

Once Kahler established complete profiles, he had full access to people’s retirement savings, agents reported.

The feds believe Kahler stole at least $150,000 from these accounts.

A $400,000 account, belonging to someone only identified as T.M. in documents, had not been touched since 2002. Authorities said there are recorded telephone conversations with a VALIC rep and a man calling himself T.M. but believed to be Kahler.

Listening to the recordings, agents said that the caller asked the rep if “a third-party administrator was attached to the account.” A TPA is the middle man between a company and client, handling processing claims and other paperwork.

Investigators reported that 10 minutes after the caller was told there was no TPA, T.M.’s online account was opened from an IP address linked to Kahler.

Then “VALIC received an account rollover transfer form for T.M.,” according to the FBI. “The total amount to be transferred was $25,000 and the payee was listed as ‘Key RRC.’”

The check was requested to be mailed to Kahler’s Key Resources in Kenmore, records show.

On Jan. 8, investigators found another check, this time for $125,000, cleared for a VALIC customer named K.C. The check was again “made payable to ‘KEY RRC.’”

Agents later learned K.C. died in 1984.

A short time after the checks cleared, the feds found Kahler made lavish expenditures, such as taking a trip to Vegas, staying at Caesar’s and enjoying pricey tickets to see Celine Dion. Documents also list shopping excursions to Nordstrom and Dunhill and a BMW payment, all totaling thousands of dollars.

More recently, nothing seems out of the ordinary at Key Resources. When KIRO 7 went on undercover shoots, work appeared to continue as Kahler kept regular hours.

There are no outward signs indicating the FBI raided the small strip-mall office or his home in March, taking computers, thumb drives and other belongings as evidence.

When reporter Amy Clancy walked into Kahler’s office and asked if the allegations against him are true, Kahler paused and blinked furiously before stating it’s untrue.

He put the blame on AIG and accused the company of “going after their former employees.” But he also said something else — “nobody suffered a financial setback.”

When Clancy referred to the two checks that are part of the FBI investigation, Kahler replied, “I don’t know who made those lies up, but I’m done talking,” and proceeded to walk out of his own office.

The federal records seem to offer just a peek at a far-reaching investigation into Kahler.

One of the most stunning stories comes near the end of the 36-page probable cause document.

The agent heading the investigation tells the story of a woman who was Kahler’s client for 20 years. In that time, she said Kahler stopped by her and her husband’s home on numerous occasions to sign documents and talk over retirement plans.

She also said Kahler gave them regular statements showing their initial $100,000 investment grew to nearly $400,000.

But when her husband died, she learned from the annuity company it had no record of their account.

The FBI declined to be interviewed for this story.

VALIC spokesperson Linda Malamut emailed KIRO 7 this statement:

“After VALIC discovered suspicious activity, the company immediately began an investigation and later notified law enforcement. The company is fully cooperating with the authorities as the investigation continues. VALIC is working to help protect affected customers.”